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Reliance Steel & Aluminum Co. (RS - Analyst Report) reported net income of $92.3 million or $1.23 per share in the first quarter of 2011 compared with $44.7 million or 60 cents per share in the prior-year quarter. Results surpassed the Zacks Consensus Estimate of $1.07.

The first-quarter results included a pre-tax accounting charge of $20.0 million compared with $5.0 million in the first quarter of 2010.

Revenue

Quarterly sales were $1.91 billion, up 32% year over year. Results were above the Zacks Consensus Estimate of $1.84 billion. The increase was driven by price increase for all products during the quarter.

In first quarter of 2011, Reliance’s tons sold were up 12% and the average price per ton sold was up 18% compared with the prior-year quarter. Carbon steel sales were 53% of revenues; aluminum sales were 17%; stainless steel sales were 16%; alloy sales were 8%; toll processing sales were 2% and other sales were 4%.

Financial Position

Cash and cash equivalents was $76.8 at the end of March 31, 2011 versus $72.9 at the end of December 31, 2010. Net debt-to-total capital ratio was only 25.7% as of March 31, 2011; up from 23.5% as of December 31, 2010. Reliance Steel has about $715 million available on its $1.1 billion credit facility.

Cash flow from operations was $101.4 million in the first quarter of 2011 versus $54.3 million in the prior-year quarter. Capital expenditure was $34.9 million versus $22.4 million in the prior-year quarter.

Dividend

On April 26, 2011, the board of directors declared a regular quarterly cash dividend of $.12 per share of common stock, increasing 20% from $.10 per share at the beginning of the quarter.

The second quarter dividend is payable on June 24, 2011 to shareholders of record as of June 3, 2011. The company has increased its dividend 16 times since the IPO in 1994 and has paid regular quarterly dividends for 52 consecutive years.

Outlook

For second-quarter 2011, Reliance Steel expects pricing to remain at strong levels. Earnings per diluted share are expected to be in the range of $1.20 to $1.30.

Reliance Steel faces stiff competition from Metals USA Holdings Corp. (MUSA - Snapshot Report) and Worthington Industries Inc. (WOR - Snapshot Report).

We maintain our Outperform recommendation on Reliance Steel. Currently, it holds a Zacks #2 Rank (Buy) on the stock.

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